How to Build a Passive Income Through Royalties

Royalties are an excellent means of earning money from your talent or skill. Famous writers, musicians and singers become millionaires thanks to impressive royalty payments.

What exactly are Royalties?

A royalty is paid for a patented or copyrighted work. The best part about royalties is that once your book/ piece of music/song/delicious recipe is sold, you can get paid for it repeatedly. Royalties can be classified as an effective source of passive income and have the potential to generate passive income for several years.

You might want to invest the effort and time the first time around so that your product becomes popular and sought after. After that the product generates its own income.

The book publisher or music company will pay you royalties. They will own the patent or copyright to your product and will pay you royalties as your product sells. Obviously, you stand to earn higher levels of passive income on popular and hot-selling products. Royalties can run into thousands, indeed millions of pounds.

If your product continues to be popular, you can consider renegotiating your contract.

Ideas that could earn you royalty payments:

If you are a gifted writer, writing books are one of the best ways to earn royalties

Beautiful soulful music, both instrumental and vocal, can fetch you lucrative copyright contracts

If you are a computer whiz, you can consider copyrighting your application or software

The following tips help you negotiate a royalty contract:

Never agree to transfer ‘all rights’. You can allow printing, publishing, re-publishing rights etc but avoid transferring all rights

Be careful of ‘subsidiary rights’. Subsidiary rights means your book publisher is allowed to use your product for motion picture production, stage production etc. Keep control of subsidiary rights, this way you can control the proportion of royalty due to you

Above all, ensure that you retain rights to cancel your contract and retain full copyright of your work

Earning money from royalties is perhaps one of the most lucrative ways to earn a passive income. Royalties can generate income over long periods of time for a one-time investment of time, talent and effort.

Do you receive an income through royalties? Share your tips in the comments below.

[…] If you have a talent for writing, cooking or music, you can use your spare time to create a product that will sell. Invest your time and a little money once on a product or service that people demand, and you have the chance of earning royalties on your creation hundreds of times over for many years to come. Click here to read our post on creating an income through royalties. […]